While a two-wire thermostat works for systems that have a furnace without air conditioning, in most cases, another type of thermostat is the best choice. Two-wire thermostats are very limited in function.
The two-wire thermostat is a simple on-off switch mounted on a bimetal strip. Many older thermostats used a bulb of mercury. As the bimetal strip responds to temperature changes, the bulb moves back and forth so the mercury completes the circuit or breaks it to start or stop the furnace.
Digital two-wire thermostats are available for replacing older mercury models. However, the two-wire thermostats require a battery if the owner wants to program the temperature setting or have backlighting for the digital display. If the owner prefers upgrading to the more common types of thermostat in use, he must have an electrician add the third wire that powers the thermostat. By choosing the battery model or adding the third wire, the owner is able to enjoy the benefits of a programmable thermostat.
In new construction, two-wire thermostats are becoming less common as consumers prefer heat pumps or furnace and air conditioning combination systems. These systems are still able to operate using a single thermostat, although it requires more than just two wires.